In the litigation of this dispute between the plaintiffs, Christopher and Tracey Groce, who were insured under a homeowners policy issued by American Family Mutual Insurance Company and obtained through insurance agent Michael Meek, the trial court granted summary judgment for the defendants on various grounds including that the plaintiffs failed to commence the action within the applicable statute of limitations. Finding the statute of limitation defense applicable, the Court of Appeals affirmed.
Groce v. Am. Family Ins., Co.,

Page 1156

986 N.E.2d 828, 833 (Ind.Ct.App. 2013). We granted transfer to reconsider the applicability of
Filip v. Block, 879 N.E.2d 1076 (Ind. 2008), but conclude that the analysis of the Court of Appeals was sound.

In 1997, the Groces purchased a home and obtained a homeowners insurance policy from American Family. On October 21, 2007, the home sustained substantial fire damage. Additional facts will be supplied as needed and may be found in the opinion of the Court of Appeals. A dispute arose regarding the amount of insurance claim benefits payable under the policy, and on June 22, 2009, the Groces filed their complaint against the insurance company and Meek. The plaintiffs characterize this as a negligence action. Appellants' Br. at 18. They contend that " Meek negligently failed to obtain a fire insurance policy . . . which would have paid the entire cost of reconstructing their [r]esidence if it was damaged or destroyed by fire," and that the insurance company is vicariously liable for Meek's negligence. Id. at 18-19.

Such tort actions are governed by Indiana Code section 34-11-2-4, which requires that they be commenced within two years " after the cause of action accrues." In general, and in the context of claims of negligent procurement of insurance, " the cause of action of a tort claim accrues and the statute of limitations begins to run when the plaintiff knew or, in the exercise of ordinary diligence, could have discovered that an injury had been sustained as a result of the tortious act of another."
Filip, 879 N.E.2d at 1082, quoting Wehling v. Citizens Nat'l Bank, 586 N.E.2d 840, 843 (Ind. 1992). The arguments of the parties, the decision of the trial court, and the opinion of the Court of Appeals, each acknowledge that today's case is governed in large part by this Court's analysis in Filip, to which the present case is strikingly familiar.

In Filip, the plaintiffs, owners of an apartment complex substantially damaged by fire, brought an action against an insurance agency and its agent from whom the plaintiffs had obtained their insurance policy. Because of the coverage limitations, a substantial part of the loss was uninsured. The plaintiffs claimed that because the agent told them that their property would " be covered," they should have received replacement cost instead of actual value coverage, that the policy limit was less than replacement cost, that the policy failed to cover nonbusiness personal property, and that the policy failed to include business interruption coverage. The trial court granted summary judgment for the defendants because the two-year statute of limitations for negligence claims had expired. This Court affirmed the trial court, but in the process presented detailed legal analysis relevant and helpful to our consideration of the present case.

The Filip Court began its analysis noting " that a claim against an agent for negligent procurement of the wrong coverage begins at the start of coverage if the breach was discoverable at the time through ordinary diligence." Id. at 1082. While the physical loss did not occur until the fire, a policyholder receives protection from risk of loss when the policy is issued, and thus any claim based on inadequacy of coverage generally occurs when the policy is issued. Id. at 1083. Because the Filip plaintiffs could have ascertained that " their policy lacked coverage of nonbusiness personal property and business interruption, and that the building and business personal property coverage had inadequate limits," the ...

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